* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download more of something often means less of something else
Venture capital financing wikipedia , lookup
Private equity secondary market wikipedia , lookup
Foreign direct investment in Iran wikipedia , lookup
Systemic risk wikipedia , lookup
Fund governance wikipedia , lookup
Capital gains tax in Australia wikipedia , lookup
Internal rate of return wikipedia , lookup
Stock trader wikipedia , lookup
Financial crisis wikipedia , lookup
Negative gearing wikipedia , lookup
Private money investing wikipedia , lookup
Corporate venture capital wikipedia , lookup
Investor-state dispute settlement wikipedia , lookup
Early history of private equity wikipedia , lookup
International investment agreement wikipedia , lookup
Socially responsible investing wikipedia , lookup
History of investment banking in the United States wikipedia , lookup
Environmental, social and corporate governance wikipedia , lookup
MONTHLY CLIENT LETTER Investment Management MORE OF SOMETHING OFTEN MEANS LESS OF SOMETHING ELSE By Gene Balas, CFA t United Capital, we often say, “More of something often means less of something else.” We repeat this phrase to ourselves and to our clients because we believe that it captures an important investment truth that can help us reach our FinLife goals. In fact, it resonates so strongly with us that we’ve designed a graphic representation of this concept as it relates to our investment platform. The image, a triad or trident, seeks to distinctively define what each strategy is – and what it is not. A When you and your United Capital financial adviser meet to develop or update your Personalized Portfolio, you will notice that our strategies appear on a trident, with low cost tracking to a benchmark at the center, and with mutually-exclusive axes radiating from there for outperformance, protection, and tax minimization. So what does this picture really say? We contend that the trident highlights the investment choices we need to make when identifying the investment goal for a specific, individual account. Consider, for example, the resources that must be expended in order to achieve outperformance relative to a benchmark index, and how that must necessarily move away from “low cost” solutions. Moreover, if that strategy successfully outperforms a benchmark, it will no longer closely track that benchmark, much less be tax efficient. In a similar vein, a strategy whose primary focus is on risk avoidance can’t, at the same time, take aggressive positions that could pay off handsomely, because it could instead suffer notable losses if the investment thesis doesn’t pan out. No investment professional has a crystal ball, so it is impossible to invest in a strategy that can exploit potential profits yet takes no risks at all. Opportunities, by definition, come with some sort of risk or another. Otherwise, they are not opportunities. By prioritizing which matters most to you for each of your particular accounts – low cost tracking, outperformance, tax minimization, or protection – we aim to provide solutions that best fit with your highest need for a specific account. Of course, these are spectrums, not a © 2015 United Capital Financial Advisers, LLC. All Rights Reserved www.unitedcp.com July 2015 MONTHLY CLIENT LETTER Investment Management yes/no decision. One can have degrees to which an investment focuses on outperformance, for example. In fact, the spectrum can be quite broad. Even within the same investment series, you can choose, hypothetically, between a 100% equity version and a balanced version that contains varying elements of fixed income. Of course, every investor is a complex individual and often has many nuanced investment objectives and accompanying emotions about investing. The answer of how to address these competing agendas is to reconcile your asset constituencies with your various, competing investment goals. Many clients have different accounts representing distinct pools of funds, each with a separate time horizon and investment objective. One may invest a retirement account entirely different from the college savings account for a child now entering high school. And then the same client may have one pool of funds with which they can take absolutely no risk and another pool of funds with which they can afford to take significant risks, depending on the ultimate goals that those funds serve. Each account may have a different objective – and thus a different solution, on a different axis on our platform, all aggregating up to a very multi-faceted approach to investing. That means that our paradigm of viewing our investment platform holds true when one disaggregates your entire finances into a more easily understood (not to mention more actionable) framework of how to invest each of your individual accounts. And it is at this juncture where our triad fits into the equation. By identifying where a particular portfolio fits onto the triad, you can easily conceptualize the idea that more of something often means less of something else. A greater emphasis on protection by necessity means that one can’t focus on outperformance or follow a lowestcost index strategy, and so on. By putting investments into this framework – and selecting investment vehicles that match your specific and mutually exclusive goals for an account – we can best help you achieve your goals. And by understanding this tradeoff upfront, your journey to your investment destination will likely take a more satisfying and appealing route. Disclosures: United Capital Financial Advisers, LLC (“United Capital”) provides financial life management and makes recommendations based on the specific needs and circumstances of each client. For clients with managed accounts, United Capital has discretionary authority over investment decisions. Investing involves risk, including possible loss of principal, and clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. The information contained in this piece is intended for information only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. Please contact your financial adviser with questions about your specific needs and circumstances. The information and opinions expressed herein are obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. Opinions expressed are current as of the date of this publication and are subject to change. Certain statements contained within are forward-looking statements including, but not limited to, predictions or indications of future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties. Investing strategies, such as asset allocation, diversification, or rebalancing, do not assure or guarantee better performance and cannot eliminate the risk of investment losses. There are no guarantees that a portfolio employing these or any other strategy will outperform a portfolio that does not engage in such strategies. Tactical Asset allocation strategy is not for every investor due to its potential higher tax liabilities. Past performance is not indicative of future results. An investor cannot invest directly in an index. Moreover, indices do not reflect commissions or fees that may be charged to an investment product based on the index, which may materially affect the returns presented. © 2015 United Capital Financial Advisers, LLC. All Rights Reserved www.unitedcp.com July 2015